ESPD Espeed (MM)

eSpeed, Inc. (NASDAQ: ESPD), a leading developer of electronic marketplaces and related trading technology for the global capital markets, today reported results for the second quarter ended June 30, 2006. Second Quarter 2006 Earnings eSpeed reported a net loss of $0.4 million, or $0.01 per diluted share, for the second quarter of 2006 based on Generally Accepted Accounting Principles (GAAP). To reflect earnings generated from the Company's operations, eSpeed also reported non-GAAP net operating income of $1.8 million, or $0.04 per diluted share. The difference between non-GAAP net operating income and the GAAP net loss for the quarter occurred primarily due to $2.0 million in expenses relating to the relocation of the Company's London office and $0.5 million in patent litigation costs, partially offset by a positive settlement of a tax-related matter of $0.3 million. All of these differences were net of tax. For comparative purposes, eSpeed reported a GAAP net loss of $1.5 million, or $0.03 per diluted share, for the second quarter of 2005. For the same period, the Company reported non-GAAP net operating income of $1.9 million, or $0.04 per diluted share. The difference between non-GAAP net operating income and the GAAP net loss for the second quarter 2005 was $2.6 million in MTS-related expenses, $0.6 million for patent litigation costs, and a non-cash charge of less than $0.1 million related to business partner securities, all net of tax. Second Quarter 2006 Revenues eSpeed's total GAAP and non-GAAP operating revenues for the second quarter of 2006 were $39.0 million. The Company reported GAAP and non-GAAP total revenues of $37.5 million for the second quarter of 2005. Fully electronic revenues were $17.3 million in the second quarter of 2006 compared to $18.8 million for the second quarter of 2005. Revenues from Software Solutions in the second quarter of 2006 were $11.5 million versus $10.4 million in the year ago period. Voice assisted and screen assisted revenues totaled $8.1 million in the second quarter of 2006 compared with $6.8 million in the second quarter of 2005. Non-GAAP pre-tax operating margin was 7.3 percent in the second quarter of 2006. See "Non-GAAP Financial Measures" below for a detailed description of the Company's non-GAAP financial measures. Second Quarter 2006 Volume and Transactions on the eSpeed System Fully electronic volume on the eSpeed system, excluding new products, was $10.2 trillion for the second quarter of 2006, up 43.9 percent from $7.1 trillion in the second quarter of 2005. eSpeed's voice-assisted volume for the second quarter of 2006 was $8.6 trillion, an increase of 16.4 percent over the $7.4 trillion reported in the second quarter of 2005. Fully electronic volume on the eSpeed system for new products, which the Company defines as foreign exchange, interest rate swaps, futures and repos, was $744 billion for the second quarter of 2006, up 47.0 percent against the $506 billion reported in the second quarter of 2005. Cash Flow & Cash eSpeed generated cash flow from operations of $4.3 million during the second quarter of 2006, compared with $8.6 million during the comparable period in 2005. The Company also reports free cash flow, which it defines as cash from operations less net cash used in investing activities, including capital expenditures. eSpeed's free cash flow was $0.8 million for the second quarter of 2006 and $0.2 million in the year-earlier period. Excluding related party receivables and payables, free cash flow for the second quarter of 2006 was $6.1 million compared with $4.1 million in the year-ago quarter. As of June 30, 2006, eSpeed's cash and cash equivalents were approximately $178.2 million. Outlook For the third quarter of 2006, eSpeed expects to generate non-GAAP operating revenues in excess of $38 million and expects non-GAAP net operating income to be in the range of $0.02 to $0.03 per diluted share. For full year 2006, eSpeed now expects to generate non-GAAP operating revenues in excess of $154 million, up from the previous outlook of $152 million. The Company now expects non-GAAP operating expenses to be towards the lower end of its previously stated range of $144 million to $147 million. eSpeed currently expects full year 2006 non-GAAP net operating income to be in the range of $0.10 to $0.12 per diluted share, which is an increase from the prior range of $0.07 to $0.10 per diluted share. The Company will host a conference call on Thursday, August 3, 2006 at 8:30 a.m EDT, to discuss the above results. To listen to the call via audio webcast, please visit www.espeed.com. Please note: listeners must have a Real Media or Windows Media plug in and headphones or speakers to listen to the webcast. Non-GAAP Financial Measures To supplement eSpeed's consolidated financial statements presented in accordance with GAAP and to better reflect the Company's quarter-over-quarter and comparative year-over-year operating performance, eSpeed uses non-GAAP financial measures of revenues, net income and earnings per share, which are adjusted to exclude certain expenses and gains. In addition, the Company provides a computation of free cash flow. These non-GAAP financial measurements do not replace the presentation of eSpeed's GAAP financial results but are provided to improve overall understanding of the Company's current financial performance and its prospects for the future. Specifically, eSpeed believes the non-GAAP financial results provide useful information to both management and investors regarding certain additional financial and business trends relating to the Company's financial condition and results from operations. In addition, eSpeed's management uses these measures for reviewing the Company's financial results and evaluating eSpeed's financial performance. For the second quarter of 2006, the difference between GAAP net income and non-GAAP net operating income was $2.2 million, net of tax. eSpeed considers "non-GAAP net operating income" to be after-tax income generated from the Company's continuing operations excluding certain non-recurring or non-core items such as, but not limited to, asset impairments, litigation judgments, costs or settlements, restructuring charges, costs related to potential acquisitions, charitable contributions, insurance proceeds, business partner securities, gains or losses on investments and similar events. The amortization of patent costs and associated licensing fees (including those made in settlement of litigation) from such patents are generally treated as operating items. Material judgments or settlement amounts paid or received and impairments to all or a portion of such assets are generally treated as non-operating items. Management does not provide guidance of GAAP net income because certain items identified as excluded from non-GAAP net operating income are difficult to forecast. About eSpeed, Inc. eSpeed, Inc. (NASDAQ: ESPD) is a leader in developing and deploying electronic marketplaces and related trading technology that offers traders access to the most liquid, efficient and neutral financial markets in the world. eSpeed operates multiple buyer, multiple seller real-time electronic marketplaces for the global capital markets, including the world's largest government bond markets and other fixed income and foreign exchange marketplaces. eSpeed's suite of marketplace tools provides end-to-end transaction solutions for the purchase and sale of financial products over eSpeed's global private network or via the Internet. eSpeed's neutral platform, reliable network, straight-through processing and superior products make it the trusted source for electronic trading at the world's largest fixed income and foreign exchange trading firms and major exchanges. To learn more, please visit www.espeed.com. Discussion of Forward-Looking Statements by eSpeed, Inc. The information in this press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, our relationship with Cantor Fitzgerald and its affiliates, the costs and expenses of developing, maintaining and protecting our intellectual property, including judgments or settlements paid or received and their related costs, the possibility of future losses and negative cash flow from operations, the effect of market conditions, including trading volume and volatility, our pricing strategy and that of our competitors, our ability to develop new products and services, to enter new markets, to secure and maintain market share, to enter into marketing and strategic alliances, to hire new personnel, to expand the use of our electronic system, to induce clients to use our marketplaces and services and to effectively manage any growth we achieve, the effects of the attacks on the World Trade Center on September 11, 2001, and other factors that are discussed under "Risk Factors" in eSpeed's Annual Report on Form 10-K filed with the Securities and Exchange Commission. We believe that all forward-looking statements are based upon reasonable assumptions when made; however, we caution that it is impossible to predict actual results or outcomes or the effects of risks, uncertainties or other factors on anticipated results or outcomes and that, accordingly, you should not place undue reliance on these statements. Forward-looking statements speak only as of the date when made, and we undertake no obligation to update these statements in light of subsequent events or developments. Actual results and outcomes may differ materially from anticipated results or outcomes discussed in forward-looking statements. -0- *T eSpeed, Inc and Subsidiaries CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (in thousands, except share and per share data) June 30, December 2006 31, 2005 ----------- --------- (Unaudited) Assets Cash and cash equivalents $37,495 $37,070 Reverse repurchase agreements with related parties 140,666 141,365 ----------- --------- Total cash and cash equivalents 178,161 178,435 Fixed assets, net 56,412 58,291 Investments 7,787 7,742 Goodwill 12,184 12,184 Other intangibles, net 9,820 11,356 Receivables from related parties 8,627 4,345 Other assets 15,831 8,581 ----------- --------- Total assets $288,822 $280,934 =========== ========= Liabilities and Stockholders' Equity Current liabilities: Payables to related parties 4,099 7,588 Accounts payable and accrued liabilities 26,619 19,649 ----------- --------- Total current liabilities 30,718 27,237 Deferred income 7,384 7,593 ----------- --------- Total liabilities 38,102 34,830 ----------- --------- Commitments and contingencies - - Stockholders' Equity: Class A common stock, par value $.01 per share; 200,000,000 shares authorized; 35,541,521 and 34,387,380 shares issued at June 30, 2006 and December 31, 2005, respectively 355 343 Class B common stock, par value $.01 per share; 100,000,000 shares authorized; 21,139,270 and 22,139,270 shares issued and outstanding at June 30, 2006 211 221 and December 31, 2005, respectively, convertible to Class A common stock Additional paid-in capital 298,274 294,987 Unearned stock-based compensation (763) (1,592) Treasury stock, at cost; 6,449,991 and 6,488,047 shares of Class A common stock at June 30, 2006 and December 31, 2005, respectively (62,132) (62,486) Retained earnings 14,775 14,631 ----------- --------- Total stockholders' equity 250,720 246,104 ----------- --------- Total liabilities and stockholders' equity $288,822 $280,934 =========== ========= eSpeed, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME IN ACCORDANCE WITH GAAP (unaudited) (in thousands, except per share data) Three Months Six Months Ended Ended ----------------- ----------------- June 30, June 30, June 30, June 30, 2006 2005 2006 2005 -------- -------- -------- -------- Revenues: Transaction revenues Fully electronic transactions with related parties $15,704 $18,804 $31,385 $39,241 Fully electronic transactions with unrelated parties 1,601 - 2,639 - -------- -------- -------- -------- Total fully electronic transactions 17,305 18,804 34,024 39,241 Voice-assisted brokerage transactions with related parties 6,648 6,444 13,903 12,938 Screen-assisted open outcry transactions with related parties 1,438 403 2,864 810 -------- -------- -------- -------- Total transaction revenues 25,391 25,651 50,791 52,989 -------- -------- -------- -------- Software Solutions fees from related parties 7,897 6,657 15,388 12,761 Software Solutions and licensing fees from unrelated parties 3,572 3,765 7,371 7,942 Insurance recovery - - 3,500 - Interest income 2,093 1,382 4,455 2,667 -------- -------- -------- -------- Total revenues 38,953 37,455 81,505 76,359 -------- -------- -------- -------- Expenses: Compensation and employee benefits 12,372 12,890 26,230 25,941 Amortization of software development costs and other intangibles 5,627 4,504 12,517 9,170 Other occupancy and equipment 11,646 7,536 20,279 14,945 Professional and consulting fees 2,225 2,129 4,135 5,070 Communications and client networks 2,000 1,882 4,027 3,638 Marketing 265 369 597 862 Administrative fees to related parties 3,670 3,422 7,097 7,299 Amortization of business partner and non-employee securities - 143 19 260 Acquisition related costs - 4,124 - 4,124 Other expenses 1,915 2,863 3,960 5,354 -------- -------- -------- -------- Total operating expenses 39,720 39,862 78,861 76,663 -------- -------- -------- -------- -------- -------- -------- -------- (Loss) income before income taxes (767) (2,407) 2,644 (304) -------- -------- -------- -------- Income tax (benefit) provision (391) (949) 1,000 (185) -------- -------- -------- -------- Net (loss) income $(376) $(1,458) $1,644 $(119) ======== ======== ======== ======== Per share data: Basic (loss) earnings per share $(0.01) $(0.03) $0.03 $(0.00) ======== ======== ======== ======== Diluted (loss) earnings per share $(0.01) $(0.03) $0.03 $(0.00) ======== ======== ======== ======== Basic weighted average shares of common stock outstanding 50,142 51,281 50,207 52,205 ======== ======== ======== ======== Diluted weighted average shares of common stock outstanding 50,142 51,281 51,150 52,205 ======== ======== ======== ======== NON-GAAP CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except per share data) Three Months Six Months Ended Ended ----------------- ----------------- June 30, June 30, June 30, June 30, 2006 2005 2006 2005 -------- -------- -------- -------- Revenues: Transaction revenues Fully electronic transactions with related parties $15,704 $18,804 $31,385 $39,241 Fully electronic transactions with unrelated parties 1,601 - 2,639 - -------- -------- -------- -------- Total fully electronic transactions 17,305 18,804 34,024 39,241 Voice-assisted brokerage transactions with related parties 6,648 6,444 13,903 12,938 Screen-assisted open outcry transactions with related parties 1,438 403 2,864 810 -------- -------- -------- -------- Total transaction revenues 25,391 25,651 50,791 52,989 -------- -------- -------- -------- Software Solutions fees from related parties 7,897 6,657 15,388 12,761 Software Solutions and licensing fees from unrelated parties 3,572 3,765 7,371 7,942 Interest income 2,093 1,382 4,056 2,667 -------- -------- -------- -------- Total non-GAAP revenues 38,953 37,455 77,606 76,359 -------- -------- -------- -------- Expenses: Compensation and employee benefits 12,797 12,890 26,431 25,941 Amortization of software development costs and other intangibles 5,627 4,504 11,354 9,170 Other occupancy and equipment 8,383 7,536 16,372 14,945 Professional and consulting fees 1,435 1,093 2,598 2,052 Communications and client networks 2,000 1,882 4,027 3,638 Marketing 265 369 597 862 Administrative fees to related parties 3,670 3,422 7,097 7,299 Other expenses 1,915 2,863 3,961 5,354 -------- -------- -------- -------- Total non-GAAP operating expenses 36,092 34,559 72,437 69,261 -------- -------- -------- -------- -------- -------- -------- -------- Non-GAAP income before income taxes 2,861 2,896 5,169 7,098 -------- -------- -------- -------- Non-GAAP income tax provision 1,015 1,026 1,956 2,552 -------- -------- -------- -------- Non-GAAP net operating income 1,846 1,870 3,213 4,546 ======== ======== ======== ======== Non-operating (loss) income: Amortization of business partner and non-employee securities, net of tax - (92) (11) (166) Litigation costs, net of tax (513) (638) (955) (1,901) Acquisition related costs, net of tax - (2,598) - (2,598) Accelerated depreciation, net of tax - - (689) - Office relocation cost, net of tax (1,978) - (2,360) - Tax settlement, net of tax 269 - 373 - Insurance recovery, net of tax - - 2,073 - -------- -------- -------- -------- Total non-operating loss (2,222) (3,328) (1,569) (4,665) -------- -------- -------- -------- Net (loss) income $(376) $(1,458) $1,644 $(119) ======== ======== ======== ======== Per share data: Basic non-GAAP income before income taxes per share $0.06 $0.06 $0.10 $0.14 Basic non-GAAP tax provision per share $0.02 $0.02 $0.04 $0.05 -------- -------- -------- -------- Basic non-GAAP net operating income per share $0.04 $0.04 $0.06 $0.09 Basic non-operating (loss) income per share $(0.05) $(0.07) $(0.03) $(0.09) -------- -------- -------- -------- Basic GAAP (loss) earnings per share $(0.01) $(0.03) $0.03 $(0.00) ======== ======== ======== ======== Diluted non-GAAP income before income taxes per share $0.06 $0.06 $0.10 $0.14 Diluted non-GAAP tax provision per share $0.02 $0.02 $0.04 $0.05 -------- -------- -------- -------- Diluted non-GAAP net operating income per share $0.04 $0.04 $0.06 $0.09 Diluted non-operating (loss) income per share $(0.05) $(0.07) $(0.03) $(0.09) -------- -------- -------- -------- Diluted GAAP (loss) earnings per share $(0.01) $(0.03) $0.03 $(0.00) ======== ======== ======== ======== Basic weighted average shares of common stock outstanding 50,142 51,281 50,207 52,205 ======== ======== ======== ======== Diluted weighted average shares of common stock outstanding 50,142 51,281 51,150 52,205 ======== ======== ======== ======== Additional data: Non-GAAP pre-tax operating margin 7.3% 7.7% 6.7% 9.3% ======== ======== ======== ======== eSpeed, Inc. & Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Three Months Ended Six Months Ended ------------------- ------------------- June 30, June 30, June 30, June 30, 2006 2005 2006 2005 --------- --------- --------- --------- Cash flows from operating activities: Net (loss) income $(376) $(1,458) $1,644 $(119) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,008 7,072 18,853 14,170 Gain on insurance recovery from related parties - - (3,500) - Equity in net (income) loss of unconsolidated investments (23) (6) (45) 15 Deferred income tax expense (1,707) (566) (602) (443) Stock-based compensation 509 679 1,082 1,332 Tax benefit from employee stock option exercises 24 46 93 84 Excess tax benefits from stock based-comp 8 - (39) - Issuance of securities under employee benefit plan - 63 - 125 Changes in operating assets and liabilities: Receivable from related parties (4,068) (6,060) (4,676) (4,430) Other assets (4,119) 525 (7,230) (498) Payable to related parties (1,225) 2,154 (3,489) (2,667) Accounts payable and accrued expenses 6,380 6,207 7,479 2,324 Deferred income (105) (105) (209) (209) --------- --------- --------- --------- Net cash provided by operating activities 4,306 8,551 9,361 9,684 --------- --------- --------- --------- Cash flows from investing activities: Insurance proceeds from related parties 3,500 - 3,500 - Purchase of fixed assets (2,563) (3,853) (4,668) (7,466) Capitalization of software development costs (4,115) (3,944) (8,300) (9,523) Capitalization of patents and related defense costs (334) (591) (575) (1,099) --------- --------- --------- --------- Net cash used in investing activities (3,512) (8,388) (10,043) (18,088) --------- --------- --------- --------- Cash flows from financing activities: Purchase of Class A common stock - (7,827) - (19,437) Proceeds from exercises of stock options and warrants 128 208 369 312 Excess tax benefits from stock based-comp (8) - 39 - Receivable from broker on stock option exercises - (49) - - --------- --------- --------- --------- Net cash provided by (used in) financing activities 120 (7,668) 408 (19,125) --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents 914 (7,505) (274) (27,529) --------- --------- --------- --------- Cash and cash equivalents at beginning of period 12,195 12,960 37,070 19,884 Reverse repurchase agreements with related parties at beginning of period 165,052 176,704 141,365 189,804 --------- --------- --------- --------- Total cash and cash equivalents at beginning of period 177,247 189,664 178,435 209,688 --------- --------- --------- --------- Cash and cash equivalents at end of period 37,495 20,567 37,495 20,567 Reverse repurchase agreements with related parties at end of period 140,666 161,592 140,666 161,592 --------- --------- --------- --------- Total cash and cash equivalents at end of period $178,161 $182,159 $178,161 $182,159 ========= ========= ========= ========= Supplemental cash information: Cash paid for income taxes $99 $- $99 $21 Dividend distribution to Cantor - - 1,500 - Contribution of license from Cantor - - 1,500 - Conversion of Class B common stock to Class A common stock - - 10 - eSpeed, Inc. & Subsidiaries CONSOLIDATED STATEMENTS OF FREE CASH FLOWS (unaudited) (in thousands) Three Months Six Months Ended Ended --------------- ----------------- June June June 30, June 30, 30, 30, 2006 2005 2006 2005 ------- ------- -------- -------- Non-GAAP income before income taxes $2,861 $2,896 $5,169 $7,098 Depreciation and amortization 9,008 7,072 18,853 14,170 Other non-cash and non-operating items (3,134) (4,566) (1,527) (5,929) ------- ------- -------- -------- Non-GAAP income before income taxes adjusted for depreciation, amortization and other 8,735 5,402 22,495 15,339 ------- ------- -------- -------- Income tax (provision) benefit on non-GAAP operating income (1,015) (1,026) (1,956) (2,552) Income tax benefit (provision) on non-operating income (loss) 1,406 1,976 956 2,738 Deferred income tax expense (1,707) (566) (602) (443) Tax benefit from stock option exercises 24 46 93 84 Income taxes paid 99 - 99 21 ------- ------- -------- -------- (Increase) decrease in current income tax payable (1,193) 430 (1,410) (152) Changes in related party receivable and payable, net (5,293) (3,907) (11,665) (7,098) Changes in other operating assets and liabilities, net 2,057 6,626 (59) 1,595 ------- ------- -------- -------- Net cash provided by operating activities 4,306 8,551 9,361 9,684 ------- ------- -------- -------- Insurance proceeds from related parties 3,500 - 3,500 - Purchases of fixed assets (2,563) (3,853) (4,668) (7,466) Capitalization of software development costs (4,115) (3,944) (8,300) (9,523) Capitalization of patents and related defense costs (334) (591) (575) (1,099) ------- ------- -------- -------- Free cash flows 794 163 (682) (8,404) ------- ------- -------- -------- Related party receivable and payable, net 5,293 3,907 11,665 7,098 ------- ------- -------- -------- Free cash flows, net of related party activity $6,087 $4,070 $10,983 $(1,306) ======= ======= ======== ======== eSpeed, Inc. and Subsidiaries RECONCILIATION of NON-GAAP FINANCIAL MEASURES TO GAAP (unaudited) (in thousands) Three Months Six Months Ended Ended ----------------- ----------------- June 30, June 30, June 30, June 30, 2006 2005 2006 2005 -------- -------- -------- -------- Total non-GAAP revenues $38,953 $37,455 $77,606 $76,359 Insurance proceeds (a) - - 3,500 - Tax settlement (b) - - 399 - -------- -------- -------- -------- Total GAAP revenues $38,953 $37,455 $81,505 $76,359 -------- -------- -------- -------- Total non-GAAP operating expenses $36,092 $34,559 $72,437 $69,261 Amortization of business partner and non-employee securities (c) - 143 19 260 Litigation costs (d) 790 1,036 1,537 3,018 Tax settlement (e) (425) - (201) - Accelerated amortization (f) - - 1,162 - Office relocation costs (g) 3,263 - 3,907 - Acquisition related costs (h) - 4,124 - 4,124 -------- -------- -------- -------- Total GAAP operating expenses $39,720 $39,862 $78,861 $76,663 -------- -------- -------- -------- Non-GAAP income before income taxes $2,861 $2,896 $5,169 $7,098 Sum of reconciling items = (a) + (b) - (c) - (d) - (e) - (f) - (g) - (h) (3,628) (5,303) (2,525) (7,402) -------- -------- -------- -------- GAAP (loss) income before income taxes $(767) $(2,407) $2,644 $(304) -------- -------- -------- -------- Non-GAAP income tax provision $1,015 $1,026 $1,956 $2,552 Income tax expense on non- operating income (i) (1,406) (1,975) (956) (2,737) -------- -------- -------- -------- GAAP income tax provision $(391) $(949) $1,000 $(185) -------- -------- -------- -------- Non-GAAP net operating income $1,846 $1,870 $3,213 $4,546 Sum of reconciling items = (a) + (b) - (c) - (d) - (e) - (f) - (g) - (h) - (i) (2,222) (3,328) (1,569) (4,665) -------- -------- -------- -------- GAAP net (loss) income $(376) $(1,458) $1,644 $(119) -------- -------- -------- -------- eSpeed, Inc. and Subsidiaries Quarterly Market Activity Report The following table provides certain volume and transaction count information on the eSpeed system for the periods indicated. ------------ ------------ ------------ 2Q05 3Q05 4Q05 ------------ ------------ ------------ Volume (in billions) ------------------------------- Fully Electronic Volume - Excluding New Products 7,111 8,014 7,500 Fully Electronic Volume - New Products* 506 376 540 Voice-Assisted Volume 7,401 8,576 7,608 ------------ ------------ ------------ Total Electronic Volume 15,018 16,966 15,648 ============ ============ ============ Electronic Transaction Count ------------------------------- Fully Electronic Transactions - Excluding New Products 1,304,403 1,642,579 1,640,167 Fully Electronic Transactions - New Products* 91,408 115,483 111,801 Voice-Assisted Transactions 215,229 224,291 193,742 ------------ ------------ ------------ Total Transactions 1,611,040 1,982,353 1,945,710 ============ ============ ============ ------------ ------------ ------------ eSpeed Equities Direct Access (Number of Shares Traded In Millions) 178 154 147 ============ ============ ============ Trading Days 64 64 61 * New Products defined as Foreign Exchange, Interest Rate Swaps, Repos and Futures. CBOT Futures volume calculated based on per contract notional value of $200,000 for the two year contract and $100,000 for all others. Global Interest Rate Futures Volume (1) CBOT - US Treasury Contracts 120,086,840 109,470,625 101,854,952 CME - Euro $ Contracts 117,034,054 105,199,005 97,306,869 EUREX - Bund Contracts 80,150,635 66,780,116 68,817,862 Fed UST Primary Dealer Volume (in billions) (2) UST Volume 36,749 34,554 32,820 Average Daily UST Volume 574 540 538 NYSE - Volume (shares traded) - in millions (3) 100,439 98,074 105,879 Transaction Value - in millions 3,456,359 3,513,352 3,738,882 NASDAQ - Volume (shares traded) - in millions (4) 112,473 104,927 110,647 Transaction Value - in millions 2,467,331 2,353,027 2,584,578 % Change % Change ------------ ------------ --------- --------- 1Q06 2Q06 2Q06 vs 2Q06 vs 1Q06 2Q05 ------------ ------------ Volume (in billions) ------------------------ Fully Electronic Volume - Excluding New Products 8,957 10,235 14.3% 43.9% Fully Electronic Volume - New Products* 524 744 42.0% 47.0% Voice-Assisted Volume 8,093 8,618 6.5% 16.4% ------------ ------------ --------- --------- Total Electronic Volume 17,574 19,597 11.5% 30.5% ============ ============ ========= ========= Electronic Transaction Count ------------------------ Fully Electronic Transactions - Excluding New Products 1,971,347 2,035,458 3.3% 56.0% Fully Electronic Transactions - New Products* 131,700 138,421 5.1% 51.4% Voice-Assisted Transactions 228,124 202,600 (11.2%) (5.9%) ------------ ------------ --------- --------- Total Transactions 2,331,171 2,376,479 1.9% 47.5% ============ ============ ========= ========= ------------ ------------ --------- --------- eSpeed Equities Direct Access (Number of Shares Traded In Millions) 203 171 (15.7%) (4.0%) ============ ============ ========= ========= Trading Days 62 63 * New Products defined as Foreign Exchange, Interest Rate Swaps, Repos and Futures. CBOT Futures volume calculated based on per contract notional value of $200,000 for the two year contract and $100,000 for all others. Global Interest Rate Futures Volume (1) CBOT - US Treasury Contracts 127,606,543 128,443,758 0.7% 7.0% CME - Euro $ Contracts 117,284,097 127,350,219 8.6% 8.8% EUREX - Bund Contracts 85,217,459 88,078,646 3.4% 9.9% Fed UST Primary Dealer Volume (in billions) (2) UST Volume 34,810 33,688 (3.2%) (8.3%) Average Daily UST Volume 561 535 (4.8%) (6.9%) NYSE - Volume (shares traded) - in millions (3) 108,447 121,582 12.1% 21.1% Transaction Value - in millions 4,072,426 4,627,787 13.6% 33.9% NASDAQ - Volume (shares traded) - in millions (4) 128,566 134,155 4.3% 19.3% Transaction Value - in millions 3,070,980 3,031,230 (1.3%) 22.9% Sources:(1) Futures Industry Association - Monthly Volume Report - (www.cbot.com, www.cme.com, www.eurexchange.com) (2) www.ny.frb.org/pihome/statistics/dealer - Federal Reserve Bank (3) NYSE - www.nyse.com (4) NASDAQ - www.marketdata.nasdaq.com Fiscal Year 2005 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Volume Data (in billions) Fully Electronic 2,027 2,229 2,565 2,524 2,499 2,595 Voice 1,550 1,628 1,548 1,922 2,116 3,363 Total 3,577 3,857 4,113 4,445 4,614 5,959 Transaction Count Fully Electronic 341,336 362,482 422,970 440,972 452,148 502,691 Voice 64,431 59,901 64,797 64,006 67,051 84,172 Total 405,767 422,383 487,767 504,978 519,199 586,863 Trading Days 20 19 22 21 21 22 ---------------- -------- -------- -------- -------- -------- -------- ---------------- -------- -------- -------- -------- -------- -------- Fiscal Year 2006 Jan'06 Feb'06 Mar'06 Apr'06 May'06 Jun'06 Volume Data (in billions) Fully Electronic 2,994 2,923 3,564 3,320 3,870 3,789 Voice 2,545 2,502 3,046 2,415 3,254 2,949 Total 5,539 5,425 6,609 5,735 7,124 6,738 Transaction Count Fully Electronic 672,749 643,969 786,329 685,273 782,203 706,403 Voice 76,852 70,844 80,428 59,405 73,679 69,516 Total 749,601 714,813 866,757 744,678 855,882 775,919 Trading Days 20 19 23 19 22 22 ---------------- -------- -------- -------- -------- -------- -------- Trading Days ------------------------------- 2006 ------------------------------- Q1 Q2 Q3 Q4 ------- ------- ------- ------- 62 63 63 62 2005 ------------------------------- Q1 Q2 Q3 Q4 ------- ------- ------- ------- 61 64 64 61 *T